US stocks tumble as US-China trade war rattles investors

1of7Trader Fred DeMarco works on the floor of the New York Stock Exchange, Friday, Aug. 23, 2019. Stocks tumbled on Wall Street after President Donald Trump said he "hereby ordered" U.S. companies to consider alternatives to doing business in China.Photo: Richard Drew, AP

2of7Specialist Meric Greenbaum works on the floor of the New York Stock Exchange, Friday, Aug. 23, 2019. Stocks tumbled on Wall Street after President Donald Trump said he "hereby ordered" U.S. companies to consider alternatives to doing business in China.Photo: Richard Drew, AP

3of7A screen above the floor of the New York Stock Exchange shows the closing number for the Dow Jones industrial average, Friday, Aug. 23, 2019. Stocks tumbled on Wall Street after President Donald Trump said he "hereby ordered" U.S. companies to consider alternatives to doing business in China.Photo: Richard Drew, AP

4of7Specialist Peter Giacchi works on the floor of the New York Stock Exchange, Friday, Aug. 23, 2019. Stocks tumbled on Wall Street after President Donald Trump said he "hereby ordered" U.S. companies to consider alternatives to doing business in China.Photo: Richard Drew, AP

5of7Trader Peter Mancuso works on the floor of the New York Stock Exchange, Friday, Aug. 23, 2019. Stocks tumbled on Wall Street after President Donald Trump said he "hereby ordered" U.S. companies to consider alternatives to doing business in China.Photo: Richard Drew, AP

6of7Trader Peter Tuchman, left, meets tennis great Boris Becker during his visit to the trading floor of the New York Stock Exchange, Friday, Aug. 23, 2019. Stocks tumbled on Wall Street after President Donald Trump said he "hereby ordered" U.S. companies to consider alternatives to doing business in China.Photo: Richard Drew, AP

7of7Pedestrians pass the New York Stock Exchange Friday, Aug. 23, 2019 in New York. Stocks fell sharply on Wall Street Friday after President Donald Trump called on U.S. companies to consider alternatives to doing business in China.Photo: Frank Franklin II, AP

The Dow Jones Industrial Average plunged more than 600 points Friday after the latest escalation in the trade war between the U.S. and China rattled investors. The broad sell-off sent the S&P 500 to its fourth straight weekly loss.

Stocks tumbled after President Donald Trump responded angrily on Twitter following China's announcement of new tariffs on $75 billion in U.S. goods. In one of his tweets he "hereby ordered" U.S. companies with operations in China to consider moving them to other countries — including the U.S.

Trump also said he'd respond directly to the tariffs — and after the market closed he delivered, announcing that the U.S. would increase existing tariffs on $250 billion in Chinese goods to 30% from 25%, and that new tariffs on another $300 billion of imports would be 15% instead of 10%. Those announcements are likely to influence stock markets in Asia when trading opens there Monday.

Friday's developments mark the latest escalation of an ongoing trade dispute between Washington and Beijing that has given investors whiplash as they try to assess its potential impact on the global economy. The tweets from Trump around 11 a.m. ignited a wave of selling as investors fled stocks in favor of U.S. government bonds, pushing yields higher. The price of gold also rose.

"The market is spooked by the escalation in the trade war," said Janet Johnston, portfolio manager at TrimTabs Asset Management. "Investors are looking for an endgame and we haven't seen it yet."

The S&P 500 fell 75.84 points, or 2.6%, to 2,847.11. The index is now down 4.5% for the month. It's still up 13.6% for the year.

The Dow lost 623.34 points, or 2.4%, to 25,628.90. The average briefly dropped 745 points. The Dow has had five declines of 2% or more this year, with three of them coming this month.

The Nasdaq gave up 239.62 points, or 3%, to 7,751.77. The Russell 2000 index of smaller company stocks skidded 46.52 points, or 3.1%, to 1,459.49.

Trump also said Friday morning that he was "ordering" UPS, Federal Express and Amazon to block any deliveries from China of the powerful opioid drug fentanyl. The stocks of all three companies fell as traders tried to assess the possible implications.

Matt Arnold, an analyst who covers FedEx and UPS for Edward Jones, said it could be difficult for the companies to comply should the administration draft detailed guidelines for rooting out fentanyl.

"It's difficult to picture a scenario where UPS and FedEx are all that well-equipped to detect something like this," he said.

The trade scuffle nearly overshadowed a speech by Jerome Powell in which the chairman of the Federal Reserve indicated the central bank was prepared to cut interest rates but gave no clear signal on when and by how much.

Speaking at a Fed policy conference in Jackson Hole, Wyoming, Powell noted that there's growing evidence of a global economic slowdown and suggested that uncertainty over Trump's trade wars have complicated the central bank's ability to set interest rate policy. Powell said the Fed "will act as appropriate to sustain the expansion."

Some economists saw Powell's speech as setting the stage for further interest rate cuts this year. A quarter-point rate cut reduction in September is considered all but certain. Some think the Fed will cut rates again in December.

Trump responded by again criticizing the Fed for being too slow to cut interest rates.

Technology companies, which have much to lose in the trade battle, bore the brunt of the sell-off. Apple slid 4.6% and Microsoft gave up 3.2%. Chipmaker Nvidia dropped 5.3%.

Energy stocks headed lower along with crude oil prices. The price of benchmark crude sank $1.18, or 2.1% to settle at $54.17 a barrel as traders worried that the latest escalation in the trade battle could sap global demand for energy.

U.S. bond prices rose sharply as investors sought safety, sending yields lower. The yield on the 10-year Treasury fell to 1.53% from 1.61%, a large move. Banks fell because lower yields can translate to a decline in the interest rate that lenders charge for mortgages and other consumer loans. JPMorgan Chase lost 2.5% and Citigroup dropped 3.1%.

The price of gold, another safe haven for investors during times of market turbulence and economic weakness, rose $29.30 to $1,526.60 per ounce.